Recent data released by the Ministry of Statistics & Programme Implementation (MoSPI) on India’s Consumer Price Index (CPI) showed that retail inflation eased a little to 6.44 percent in February from a high of 6.52 per cent in January. However, this decrease can’t be treated as a breather as retail inflation still remains above the RBI’s tolerance limit of 6%. Last month only RBI raised its repo rate by 25 basis points to 6.5% from 6.25%. This was the sixth time when repo rate was raised by RBI since May last year, taking the total hike to 250 basis points with the latest increase. These repo rate hikes fiercely burden the borrowers. Any Increase in the repo rate makes the borrowing expensive for the banks, which then pass this raised borrowing cost to customers in form of higher interest rates on retail loans such as home, car, and personal loans which manifest itself in form of elevated monthly EMI burden on consumers. Policy rate hikes also hamper the growth concerns in...
A blog about challenges and opportunities in Indian economy